The theHRvault blog focuses on topics that relate to the workplace, leadership, management, customer service and office politics. I will also be answering readers questions about professional and career development.

Tuesday, 25 October 2016

How to Measure Return on Investment (ROI) in Training

The ROI guru Jack Phillips defined return on Investment (ROI) as “a measure of the financial benefits obtained by an organisation over a specified period in return for a given investment in a training programme.” There comes a time where management needs to review and reflect on its training and development activities against its mission and vision. This process allows for critical questions to be asked, such as how relevant is the HRD function, how effective and most of all is the money invested adding any value?

Throughout my training career, I have observed how training professional focus on measures of attendance, completion, and delegates satisfaction to determine the success of training initiatives. The biggest challenge with this approach is that over the years it has failed to help business understand the impact of training on the organisation. Measuring the return on investment of training programmes is not only a necessary exercise but also an effective way to show the powers that be, that there’s financial value in training investing in training. So how do you determine if your investment in training is worthwhile?

Here are some useful step on how to calculate your return on a training investment (or the ROI in training):

STEP 1: UNDERSTAND THE BUSINESS NEED

You need to ask yourself what are the challenges the business is facing, this could range from customer services issue, performance management, conflict situations in the workplace. This is a critical step as defines the way forward.

STEP 2: IS TRAINING IS THE RIGHT SOLUTION

When most organisation experience challenges, the assumption is always that training can fix those challenges; training isn’t always the solution to problems. Do determine if training is a need; ask yourself the two questions, do employees know how to perform the job? Do they know the product? The answer to this will determine if training is indeed a need.

STEP 3: DEFINE THE OUTCOMES FOR THE TRAINING

In order to determine the learning outcomes, think about the challenge that the business has and ask yourself what will the training intervention achieve? What skills should the participant walk away with? Always make sure that the outcomes are directly related to the business need.

STEP 4: DESIGN THE TRAINING PROGRAM

Part of the design process it is important to understand what type of training is compatible with your target audience and the outcomes you need to achieve. i.e. is it going to be classroom based, how long will the training be, the training activities involved, the type of equipment needed and lastly what type of support is required after the training to make sure that new knowledge and skills are transferred into the workplace?

STEP 5: DEFINE YOUR METRICS

In this step, you need to determine how you will measure the success of the training programme. For example, if the organisation is experiencing issues with productivity, the intended outcome would be, increase productivity. The metrics to measure the success of the training could be, the percentage increase in productivity is, after the training intervention.

STEP 6: CONDUCT THE TRAINING & MEASURE YOUR RETURN ON INVESTMENT

After the training intervention, track the metrics you have identified, monitor changes on a regular basis and determine the success of training, if productivity improves and this improvement is worth more than the total cost of the training, then there is a positive return on your training investment.

Remember change will not happen immediately, you need to give the participants’ time to apply their new skill and knowledge.